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NRECA seeks federal aid for co-ops hit by Covid-driven load losses

image credit: Credit: National Renewable Energy Laboratory
DW Keefer's picture
Journalist Independent Journalist and Analyst

DW Keefer is a Denver-based energy journalist who writes extensively for national and international publications on all forms of electric power generation, utility regulation, business models...

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  • Apr 9, 2020
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Faced with a "dramatic drop" in commercial and industrial load as a result of reduced economic activity due to the coronavirus pandemic, the National Rural Electric Cooperative Association (NRECA) is asking Congress for federal aid to the nation’s more than 900 electric cooperatives, some of which may suffer from budget shortfalls as their members struggle to pay their electric bills.

Co-ops are not-for-profit, have no shareholders and return excess revenue to their consumer-members.  Because of this structure, some have limited reserve margins to sustain high rates of nonpayment, wrote NRECA CEO Jim Matheson in a letter to congressional leaders. “As a result of nonpayments and load falloff resulting from economic hardship, some not-for-profit electric cooperatives are facing significant operational shortfalls,” he said. “Without federal assistance, co-ops may face severe financial distress.”

NRECA is asking lawmakers to include measures to:

  • Direct the U.S. Department of Agriculture’s Rural Utilities Service (RUS) program to help co-ops save money by taking advantage of low interest rates to reprice or refinance RUS debt without penalties for borrowers. Co-ops hold more than $40 billion in RUS electric program loans.
  • Increase the amount of lending available under the RUS Guaranteed Underwriter Program. It provides guarantees for loans made to co-ops by private cooperative banks such as the National Rural Utilities Cooperative Finance Corp. (CFC) and CoBank.
  • Direct the Federal Emergency Management Agency (FEMA) to reimburse co-ops for past disasters. NRECA said that some Florida co-ops, for example, still have not received FEMA reimbursements for rebuilding their systems after Hurricane Michael in 2018.

The $2 trillion CARES Act that was passed by Congress in March to help with economic disruptuon due to the Covid-19 pandemic included several provisions sought by NRECA. These included $900 million for the Low-Income Home Energy Assistance Program, which helps some low-income and moderate-income consumers pay their utility bills.

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